Public Sector Pensions Quarterly – Spring 2025

Welcome to the Spring edition of Public Sector Pensions Quarterly, our newsletter focusing on news and developments in the world of public sector pensions over the past few months.

After a very busy start to the year with the various Government consultations closing, and the 8 pools within the Local Government Pension Scheme preparing and submitting their responses to the “LGPS: Fit for the Future” consultation, there is a very welcome momentary lull as the industry draws breath and gears up for the whirlwind of activity that is expected later in the year. With the Pension Schemes Bill apparently due before the Summer recess and Government consultation responses similarly expected in relation to IHT pension proposals, consolidation of DC schemes and the LGPS, its shaping up to be one of the industry’s busiest summers yet!

But as always, there has still been enough other activity to keep us busy. Read about: the LGPS Scheme Advisory Board’s letter to the Government which included their view of the implications of the Virgin Media case for public service pension schemes; the role of the actuary in relation to a revision of employer contribution rates between valuations (and the Government’s proposal to consult on amending the relevant LGPS regulation); LGPS Scotland’s exit credit Regulation amendment; the updated PLSA Stewardship and Voting Guidelines 2025; pension schemes and “greenwashing” risks; pensions dashboard actions to consider for public service pension schemes and much more!

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Pensions Schemes Bill – essential summer holiday reading?!

There has been talk within the industry that the Pensions Schemes Bill could land as soon as this week. We are still watching this space however as its not arrived yet. In the meantime, pensions policy items we know it will cover from last year’s Kings Speech are:- Value for money framework for DC schemes; small pots; retirement solutions; defined benefit (DB) proposals including DB superfunds; and Pensions Ombudsman clarification – “reaffirming” that it is a competent court.

There has also been some discussion about whether DB surplus amendments and/or Pension Protection Fund levy changes are likely to be included in the Bill as well. Time will tell.

We will keep you posted as and when the Bill arrives.

Virgin Media judgment and public service pension schemes – should the Government be worried?

How does the Virgin Media judgment and Section 37 apply to public service pension schemes? Following on from our article on this topic last year, Michael Hayles provides an update on a recent communication from the LGPS Scheme Advisory Board (SAB) to the Government which suggests that the SAB also thinks Virgin Media and Section 37 is potentially an issue for public service pension schemes.

Read more

Local Government Pension Scheme round-up

LGPS (Scotland) Regulations amendment – discretion to allow Administering Authorities to determine exit credit

The Local Government Pension Scheme (Scotland) (Amendment) Regulations 2025 (SSI 2025/48) came into force on 1 April 2025. These Regulations amend Regulation 61 of the Local Government Pension Scheme (Scotland) Regulations 2018 in order to create a discretion for administering authorities to determine the amount of exit credit which should be payable to an employer leaving the LGPS.

And just a reminder, following on from the above, that our own Michael Hayles and Ed Curtis joined Alistair Russell-Smith (Head of Corporate & Public Sector at Spence & Partners) on a webinar last July looking at how Scottish LGPS employers should navigate refunds of surplus becoming discretionary from July 2024 onwards.

Watch the recording

LGPS employer contributions – what is the role of the Actuary when contribution rates are reviewed between valuations?

In February all eyes were on the Kensington and Chelsea Pension Fund when it announced that it was reducing employer contribution rates to zero for the 2025/26 financial year. Ed Curtis and Serena Kutty explore how the relevant powers of the LGPS regulations operate, and in particular the role of the actuary in these circumstances.

Read more

Government’s proposal to amend the LGPS revision of contribution rates rule to prohibit it being used to manage surpluses

In related news (and as referred to in the article above), the SAB recently shared a letter it received from the Ministry for Housing, Communities and Local Government which confirms that Regulation 64A of the LGPS Regulations 2013 (which sets out a process for revising a rates and adjustments certificate) “is not intended to allow administering authorities to modify contribution rates for scheme employers as a way to manage pension fund surpluses or deficits outside of the triennial valuation cycle”. In order to avoid the rule being used in a manner which was not intended, the letter further confirms that the Government “intends to consult on changes to the regulations as they apply to revision of contribution rates (including on the role of the fund actuary)”.

The next triennial valuation of the LGPS is now underway, with an as at date of 31 March 2025. This will set the employer contribution rates which will have effect for the 2026-27 financial year.

Read the letter

Case of the Quarter

NHS Pension Scheme (CAS-60994-H2H2) – TPO upholds complaint against employer for maladministration

Dr S complained that NHS BSA had failed to send him a Pension Saving Statement (PSS) automatically for the tax years 2016/17, 2017/18 and 2018/19. His complaint was upheld by the Pensions Ombudsman (TPO) adjudicator who concluded that the NHS BSA’s maladministration would have caused Dr S significant distress and inconvenience, and that they should compensate him £500.

Dr S did not accept the adjudicator’s opinion, and the complaint was passed to TPO, Dominic Harris, for consideration. He partially agreed with the adjudicator’s decision but disagreed with the “significant” categorisation. His view was that “Rather, as this occurred on several occasions, with breaches of both the legislation and the stated level of service set out on the website, my view is that this amounts to ‘serious’ distress and inconvenience and warrants an award of £1,000”.

He did not consider that NHS BSA should compensate Dr S for financial loss as a result of the maladministration, on the basis that Dr S “continued to make payments into the scheme rather than opting out, so he will receive higher pension benefits.”
This should serve as a salutary warning for public service pension scheme managers that failing to automatically issue PSSs each year in line with statutory requirements, may result in successful complaints being raised with TPO and an award for maladministration being made against the scheme manager.

Read more

Pensions and ESG

PLSA’s 2025 stewardship and voting guidelines

The PLSA recently published its updated annual stewardship and voting guidelines, designed to offer a framework for trustees looking to make voting decisions that promote responsible investments. We take a look at what’s new for 2025.

Read more

Pension scheme investments and “greenwashing” risks

Kate Granville Smith was delighted to contribute to a recent Pensions Expert article on the challenges “greenwashing” poses for pension scheme trustees. You can read the article here.

And follow the link below to read the full article written by Kate and colleagues from across the firm, looking at what pension trustees need to know about greenwashing in the information that they receive and publish.

Read more

Governance

Dashboards – what should public service pension schemes be doing now to get ready for connection by 31 October?

The launch of pensions dashboards is now upon us with the first cohort of pension schemes having to connect by the end of April.

Public service pension schemes have a connection deadline of 31 October 2025 and there is clearly much to be done before then. Andy Prater rounds up the latest dashboards developments in this update:

Read more

Cyber security – how can we help public service pension scheme managers and LGPS Funds manage their cyber security risks?

Is your scheme or fund prepared for a cyber incident? With the ever-increasing focus from the Pensions Regulator and the government on cyber security, not to mention the increasing number of cyber attacks in the industry, building cyber resilience should be high on the agenda for all public service pension schemes.

At Burges Salmon, we are well placed to support schemes and funds at every stage of their cyber governance journey, from our fixed fee package offering (for schemes with little to no existing cyber resilience) to providing funds with bespoke methods of building their cyber resilience (including tailored policies and procedures and scenario-based (‘war-games’) training).

Please do take a look at our dedicated cyber security for pension schemes page for more details, or get in touch with Richard Pettit or Samantha Howell, our cyber security governance leads:

Find out more